Hilton Grand Vacations' second quarter was met with a negative market reaction as the company missed Wall Street’s revenue and adjusted profit expectations. Management pointed to the continued momentum of its HGV Max membership program and solid owner-driven contract sales as bright spots, but acknowledged pressure from lower tour volumes and increased promotional activity in key markets such as Las Vegas. CEO Mark Wang highlighted that owner upgrades and package sales helped offset some of the impact from these headwinds, noting, “We built momentum as we moved through the quarter, culminating in a strong June performance that carried into July.”
Is now the time to buy HGV? Find out in our full research report (it’s free).
Hilton Grand Vacations (HGV) Q2 CY2025 Highlights:
- Revenue: $1.27 billion vs analyst estimates of $1.38 billion (2.5% year-on-year growth, 8.1% miss)
- Adjusted EPS: $0.54 vs analyst expectations of $0.81 (33.1% miss)
- Adjusted EBITDA: $233 million vs analyst estimates of $275.9 million (18.4% margin, 15.6% miss)
- Operating Margin: 8.8%, up from 7.6% in the same quarter last year
- Members: 724,306, in line with the same quarter last year
- Market Capitalization: $4.01 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Hilton Grand Vacations’s Q2 Earnings Call
- Ben Chaiken (Mizuho Securities) asked about the higher mix of fee-for-service sales and its impact on EBITDA. CFO Daniel Mathewes explained that while margins on these sales are solid, the absolute dollar contribution is lower than owned inventory sales and expects the mix to stabilize around 16% in the near term.
- Brandt Montour (Barclays) inquired about the balance between new owner sales and owner upgrades, particularly with Bluegreen and Diamond integrations. CEO Mark Wang noted stabilization across new buyer cohorts and emphasized that owner upgrades have outperformed, driving a higher proportion of overall sales.
- Brandt Montour (Barclays) also questioned the outlook for Las Vegas, given recent softness. Wang acknowledged increased promotional competition and lower visitation, but highlighted the company’s ability to reallocate room nights and maintain strong owner VPGs in the market.
- Charles Scholes (Truist Securities) asked about loan book performance and VPG growth expectations. Mathewes reported stable to improving delinquency rates, with VPG growth set to remain strong in the third quarter before facing tougher comparisons in the fourth.
- Stephen Grambling (Morgan Stanley) sought clarification on the flow-through of VPG versus tour flow and implications for long-term margins. Mathewes detailed that VPG has a higher flow-through rate and that acquisitions have lowered long-term inventory costs, supporting improved margin outlook.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace of HGV Max membership upgrades and the effectiveness of new product enhancements, (2) the realization of cost synergies and progress in integrating Bluegreen operations, and (3) stabilization in key markets like Las Vegas amid competitive pressures. Financing innovations and inventory recapture strategies will also be key drivers to watch.
Hilton Grand Vacations currently trades at $43.75, down from $50.78 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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